Charging public utilities for digging up roads could generate an extra £250,000 a year for traffic schemes in Middlesbrough.

The town is one of two areas in the country chosen by the Government to trial the new system aimed at cutting congestion for road users.

But Northumbrian Water - one of the companies which will have to pay the new charges - says it has concerns about the new scheme.

As reported in later editions of last night's Gazette, the council will charge up to £300 a day when utilities dig up roads to repair equipment or lay new cables or pipes.

The £300 a day will apply to most bus routes with a £50 charge being levied on all other routes. When the work is an emergency the charge is £100 a day.

If a company has to go back on site to do the same work again because it had not been done properly the first time the charge goes up to £500 a day on major routes.

If companies manage to do their work without causing disruption, charges can be reduced or even waived.

Middlesbrough Council's Deputy leader Sylvia Connolly said the lane rental scheme was a radical approach but it was one which was hoped would benefit all road users and in particular it would make public transport more attractive.

"We want to stress the object of this exercise is not to make money but to beat congestion," she said.

Environment Commissioner Oliver Johnson said: "This scheme is part of the council's Public Service Agreement with the Government under which the council gets new freedoms as long as it can show they've improved the local quality of life."

Ian Busby, the council's highways services manager, said the effectiveness of the scheme would be measured by checking its impact on the promptness and reliability of bus services.

But Alistair Baker, spokesman for Northumbrian Water, said the company had concerns. He said: "It is only affecting utility companies - councils dig up roads as well. It is not tackling everyone who could impact on traffic flows.

"It will be interesting to see and monitor how the scheme develops. It could in the long term have an impact on customers' bills."

Mr Baker pointed out the company had 32,000kms of water pipes and sewers and was investing hundreds of millions of pounds in its infrastructure.

"You have to keep on top of improving the system and if there is a burst pipe it is essential work to repair it," he said.

"Through the Streetwise scheme utilities already co-ordinate their work with each other."